That global networks provide positive externalities to participating firms is a well-documented fact. Less is known about how the performance of non-participating firms, especially those that are small or medium-sized, changes with exposure to an increase in the presence of globally integrated firms in their vicinity. With global trade being dominated by large firms, the benefits for SMEs are often indirect, e.g. through input relationships with larger companies or through knowledge spillovers that facilitate the adoption of best practices in firms with access to globally integrated peers. This paper combines industry and regional exposure to global links in form of foreign ownership. It uses firm-level microdata for 13 OECD countries, allowing for local spillovers (or crowding out) within the same industry and across industries. Foreign investment in the firm in the same region is associated with increasing productivity of local firms, especially in form of cross-sector externalities. Horizontal (same sector) externalities are negative, especially if they are coming from foreign firms locating in distanced regions. FDI tends to be associated with employment decline in manufacturing firms, but some growth in small firms.

Productivity in Russia has been falling steadily over the past 15 years. This paper explores firm-level data to understand the contribution of individual firms to aggregate productivity and summarizes findings in the form of seven stylized facts. Policies to address the productivity decline should focus on regulatory reform to strengthen market forces; create a climate that is supportive to innovative start-ups; help unproductive firms to leave the market earlier; foster labour and capital mobility and knowledge transfer between firms and across regional borders; and embrace foreign ownership. These policies should be complemented by targeted support to households and firms severely affected by the covid-19 crisis. This note is built on the findings of an OECD Economics Department Working Paper published in early 2020.

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2  ECO/WKP(2019)62 Unclassified OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s). Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works. Comments on Working Papers are welcomed, and may be sent to the Economics Department, OECD,